Companies & Sectors
Indian oil companies may gain from political unrest in MENA region

Concerns over the wider disruption of supplies from OPEC countries could fuel further oil price increases, but at the same time improve realisations of oil companies in India which are reeling under under-recoveries

Soaring prices of crude oil in the international markets due to the political unrest in the Middle East and North Africa (MENA), will improve the realisations of private oil exploration and production companies in India, according to a research report by CRISIL.

"The margins of refining companies will also improve and the political unrest in the MENA region which has already been rocketing prices of crude oil, would fuel further price increase," the rating agency says. The report states that average crude oil (Dated Brent) prices are expected to increase more than 15% to over $102 per barrel in the fourth quarter of 2010-11 as against the previous quarter.

"In a year when we expect world dependence on OPEC oil supply to increase, concerns over a wider disruption of supplies from OPEC countries will fuel further oil price increases," said Sridhar Chandrasekhar, head, CRISIL Research. (OPEC, or the Organization of Petroleum Exporting Countries, is an intergovernmental body of 12 oil-producing countries which together account for more than two-third of the world's reserves. Most of these countries are located in the MENA region.)

Following the Union Budget presented in Parliament earlier this week, state-run oil companies from India are proposing to raise petrol prices by up to Rs4 a litre to offset rising crude oil costs, arguing that the Budget had ignored their demand for a cut on duties on fuel. The government freed pricing of petrol in June last year.

India imports 80% of its energy requirement and the average price at which India imports crude oil is about $110 a barrel. Oil companies say they are losing Rs10.70 a litre on diesel, Rs21.60 a litre on kerosene and Rs356.07 on a cooking gas cylinder.
Kisan Ratilal Choksey Shares and Securities said, "We believe it is a loss for the oil companies as no duties were cut on the fuel. Simultaneously, the subsidy amount has been reduced to Rs23,640 crore from Rs38,386 crore, a decline of 13%. With no relief from the Budget, the oil companies have no choice but to raise the petrol price which was deregulated last year. We believe this would help the companies to compensate their revenue loss."

Private and government-owned refining companies too will benefit. CRISIL, an affiliate of the international ratings and financial services company Standard & Poor's, expects gross refining margins to rise from $6.8 per barrel in the third quarter of 2010-11 to $8-9 per barrel in the fourth quarter.

On 2nd March, crude oil prices touched $116 per barrel, the highest level since the middle of 2008, and prices are expected to move northward on fears that the violence could spread to neighbouring countries such as Saudi Arabia and Iran.

Before the dust had settled in Egypt, the Libyan crisis erupted, leading many oil companies to suspend their operations there. Libya accounts for close to 2% of the global oil output. Last week, Nomura International (HK) said, "If Libya and Algeria were to halt oil production together, prices could peak above $220 per barrel and OPEC's spare capacity will be reduced to 2.1 million barrels per day, similar to levels seen during the Kuwait-Iraq conflict and when prices hit $147 per barrel in 2008."

Crude oil prices, which were already inching up over the past two year on the back of improving fundamentals, started soaring, as political turmoil erupted in Tunisia in December. As the uncertainty over oil supplies disturbed market sentiment, the unrest in Egypt pushed oil prices to over $100 per barrel.

However, CRISIL feels that "government-owned oil exploration and marketing companies will not benefit as much, as they will have to shoulder an increase in subsidy burden on account of rising oil prices."

The subsidy burden for oil marketing companies would nearly double on the quarter to Rs300 billion in January-March from Rs155 billion in the December quarter. The government compensates losses of oil marketing companies from the sale of petroleum fuels at lower than the cost price. The total under-recoveries for this fiscal ending March are expected to cross Rs750 billion.




7 years ago

High crude prices will also be beneficial as it will surely direct attention of our higly care less brains towards free and dirt cheap substitutes of petro products. Solar cooker according to my calculations can substitute 66 % of our LPG and kerosene consumption at 17 and 10 times less prices respectively. My solar cooker is making 4 dishes without wasting cooking cost and time And Sardarji uncle’s solar water heater is heating water majestically. Rain water harvesting can reduce irrigational requirement of diesel and electricity to half. Rapid development and increase in railway routes and rolling stock on per capita basis on war footing as against negative development since independence can halve need of motor fuels after 10 year. High crude will also force us to use vehicles judiciously.

RTI activist challenges propriety of MCA to decide Mahelek-SAIL merger

Babubhai Vaghela, former senior manager at IOC, says general statutory rule allowing the executive to approve mergers of government entities goes against fundamental principle of separation of powers

The proposed merger of Maharashtra Elektrosmelt (MEL) with Steel Authority of India (SAIL) is illegal and must be cancelled, according to renowned RTI activist Babubhai Vaghela.

Mr Vaghela, who was senior manager of Indian Oil Corporation (IOC) in Ahmedabad, has asked the Union government to cancel the merger, citing several judicial precedents. He has alleged that the general statutory rule (GSR) 238, of 2nd February 1978, that allows the executive to approve mergers, goes against the principle of the separation of powers.

On a similar issue on Tuesday, the Madras High Court upheld the principle of separation of power and granted an interim stay on a provision in the National Green Tribunal Act for appointment of some officials. Ruling on a PIL, a division bench said that allowing executives to play a judicial role exceeding their powers, would be contrary to the spirit of the Constitution, was against the principle of separation of powers and would nullify the purpose of fair administration of justice.

The general statutory rule 238 was issued by the government of India about a year ago in the case of the merger of IOC subsidiary Bongaigaon Refinery & Petrochemicals (BRPL) with its parent company. The rule empowers the Ministry of Corporate Affairs (MCA) to hear and approve mergers of government entities under sections 391-394 of the Companies Act 1956.

The case of the merger of Maharashtra Elektrosmelt with SAIL is to be heard before the Ministry of Corporate Affairs on 8th March.

Mr Vaghela said, "GSR 238 is against the constitutional scheme of separation of powers and has been legally challenged. Even a senior advocate of M/s Amarchand Mangaldas, representing IOC and BRPL was convinced about it, during the hearing of the IOC-BRPL merger petition by Jitesh Khosla, then joint secretary of MCA." Mr Vaghela, who was an objector in the hearing, had requested Mr Khosla to refer the jurisdiction issue for legal scrutiny.

Mr Vaghela also claims that SAIL did not send any notification to its shareholders about the annual general meeting where the decision on the merger was taken. Thus, the decision taken should be declared null and void. He has also requested the Vigilance Commission to investigate why shareholders do not receive requisite notifications. Many PSUs, including Oil and Natural Gas Corporation, he says, do not communicate matters to their shareholders.

Replying to his objection, Anirudh Das, advocate representing SAIL, said that since Mr Vaghela neither attended the meeting, nor voted on the proposal, his objection to the decision was not valid. Mr Das has also claimed that the required communication was sent by Speed Post and that the company has the receipt of the delivery by post.

Mr Vaghela, however, dismissed the argument by the advocate saying, "I did not receive the communication to attend the shareholders meeting, said to have been called by the MCA and, therefore, the question of my attending or not attending, and voting or not voting, does not arise. Papers said to have been despatched on 22nd February 2011 have, till the time of writing (this message), are not received. Knowing the extent of corruption prevalent in the government, tall claims of transferor or transferee company; Ministry of Steel or PMO cannot be taken at face value."

The Maharashtra Elektrosmelt share last traded on 17th February 2011 at a price of Rs298, marginally up from its 52-week low of Rs270 a couple of days earlier. SAIL closed 0.82% lower at Rs157.40 on the Bombay Stock Exchange today, while the benchmark Sensex closed 0.23% up at 18,489 points after a volatile trading session.



Babubhai Vaghela

7 years ago

I am Babubhai Vaghela referred to in the article. Some minor corrections based on fact are 1. By now, copies of Merger Petitions received. 2. Soft copy of Valuation Report received. Hard copy till writing this comment not received. 3. Copy of GSR 238 still not received. 4. Anirudh Das of Amarchand Managaldas confirmed I can file Objections. 5. I filed Objections. 6. MEL Merger to SAIL yet to be heard & to be approved. Hence, question of cancellation does not arise. 7. Govt Officer not authorised to dischage judicial function.


7 years ago

The writ petition challanging merger of Kochi refinart with BPCL and Air india inndian Air lines is pending in Delhi High court for three years. In madras bar association Supreme Court held that Executive can not decide judicial matter and person working in field for several years cannot be term as an expert. further Govt had in number of cases like FEma tribunal ( pareena swarup Case and competition commiseration matter had held member must be appointed in consultation with Chief Justice of India and at least Judicial Member should be there in hearing. finding of Supreme court given below:-

There is an erroneous assumption that company law matters require

certain specialized skills which are lacking in Judges. There is also an

equally erroneous assumption that members of the civil services, (either a

Group-A officer or Joint Secretary level civil servant who had never handled

any company disputes) will have the judicial experience or expertise in

company law to be appointed either as Judicial Member or Technical

Member. Nor can persons having experience of fifteen years in science,

technology, medicines, banking, industry can be termed as experts in

Company Law for being appointed as Technical Members. The practice of

having experts as Technical Members is suited to areas which require the

assistance of professional experts, qualified in medicine, engineering, and

architecture etc.

Lastly, we may refer to the lack of security of tenure. The short term of three

years, the provision for routine suspension pending enquiry and the lack of

any kind of immunity, are aspects which require to be considered and


56. We may now tabulate the corrections required to set right the defects

in Parts IB and IC of the Act :

(i) Only Judges and Advocates can be considered for appointment as
Judicial Members of the Tribunal. Only the High Court Judges, or Judges
who have served in the rank of a District Judge for at least five years or a
person who has practiced as a Lawyer for ten years can be considered for
appointment as a Judicial Member. Persons who have held a Group A or
equivalent post under the Central or State Government with experience in
the Indian Company Law Service (Legal Branch) and Indian Legal Service
(Grade-1) cannot be considered for appointment as judicial members as
provided in sub-section 2(c) and (d) of Section 10FD. The expertise in
Company Law service or Indian Legal service will at best enable them to be
considered for appointment as technical members.

(ii) As the NCLT takes over the functions of High Court, the members
should as nearly as possible have the same position and status as High Court
Judges. This can be achieved, not by giving the salary and perks of a High
Court Judge to the members, but by ensuring that persons who are as nearly
equal in rank, experience or competence to High Court Judges are appointed
as members. Therefore, only officers who are holding the ranks of
Secretaries or Additional Secretaries alone can be considered for
appointment as Technical members of the National Company Law Tribunal.
Clauses (c) and (d) of sub-section (2) and Clauses (a) and (b) of sub-section
(3) of section 10FD which provide for persons with 15 years experience inGroup A post or persons holding the post of Joint Secretary or equivalent post in Central or State Government, being qualified for appointment asMembers of Tribunal is invalid.

(iv) A `Technical Member' presupposes an experience in the field to
which the Tribunal relates. A member of Indian Company Law Service who
has worked with Accounts Branch or officers in other departments who
might have incidentally dealt with some aspect of Company Law cannot be
considered as `experts' qualified to be appointed as Technical Members.
Therefore Clauses (a) and (b) of sub-section (3) are not valid.

(v) The first part of clause (f) of sub-section (3) providing that any person
having special knowledge or professional experience of 15 years in science,
technology, economics, banking, industry could be considered to be persons
with expertise in company law, for being appointed as Technical Members
in Company Law Tribunal, is invalid.

(vi) Persons having ability, integrity, standing and special knowledge and
professional experience of not less than fifteen years in industrial finance,
industrial management, industrial reconstruction, investment and
accountancy, may however be considered as persons having expertise in
rehabilitation/revival of companies and therefore, eligible for being
considered for appointment as Technical Members.

(vii) In regard to category of persons referred in clause (g) of sub-section
(3) at least five years experience should be specified.

(viii) Only Clauses (c), (d), (e), (g), (h), and later part of clause (f) in sub-
section (3) of section 10FD and officers of civil services of the rank of the
Secretary or Additional Secretary in Indian Company Law Service and
Indian Legal Service can be considered for purposes of appointment as
Technical Members of the Tribunal.

(ix) Instead of a five-member Selection Committee with Chief Justice of
India (or his nominee) as Chairperson and two Secretaries from the Ministry
of Finance and Company Affairs and the Secretary in the Ministry of Labour
and Secretary in the Ministry of Law and Justice as members mentioned in
section 10FX, the Selection Committee should broadly be on the following

(a) Chief Justice of India or his nominee - Chairperson (with a casting vote);
(b) A senior Judge of the Supreme Court or Chief Justice of High Court - Member;
(c) Secretary in the Ministry of Finance and Company Affairs - Member; and
(d) Secretary in the Ministry of Law and Justice - Member.

(x) The term of office of three years shall be changed to a term of seven
or five years subject to eligibility for appointment for one more term. This is
because considerable time is required to achieve expertise in the concerned
field. A term of three years is very short and by the time the members
achieve the required knowledge, expertise and efficiency, one term will be
over. Further the said term of three years with the retirement age of 65 years
is perceived as having been tailor-made for persons who have retired or
shortly to retire and encourages these Tribunals to be treated as post-
retirement havens. If these Tribunals are to function effectively and

efficiently they should be able to attract younger members who will have a
reasonable period of service.

(xi) The second proviso to Section 10FE enabling the President and
members to retain lien with their parent cadre/ministry/department while
holding office as President or Members will not be conducive for the
independence of members. Any person appointed as members should be
prepared to totally disassociate himself from the Executive. The lien cannot
therefore exceed a period of one year.

(xii) To maintain independence and security in service, sub-section (3) of
section 10FJ and Section 10FV should provide that suspension of the
President/Chairman or member of a Tribunal can be only with the
concurrence of the Chief Justice of India.

(xiii) The administrative support for all Tribunals should be from the
Ministry of Law & Justice. Neither the Tribunals nor its members shall seek
or be provided with facilities from the respective sponsoring or parent
Ministries or concerned Department.

(xiv) Two-Member Benches of the Tribunal should always have a judicial
member. Whenever any larger or special benches are constituted, the
number of Technical Members shall not exceed the Judicial Members.

57. We therefore dispose of these appeals, partly allowing them, as

(i) We uphold the decision of the High Court that the creation of National
Company Law Tribunal and National Company Law Appellate Tribunal and
vesting in them, the powers and jurisdiction exercised by the High Court in
regard to company law matters, are not unconstitutional.

(ii) We declare that Parts 1B and 1C of the Act as presently structured, are
unconstitutional for the reasons stated in the preceding para. However, Parts
IB and IC of the Act, may be made operational by making suitable
amendments, as indicated above, in addition to what the Union Government
has already agreed in pursuance of the impugned order of the High Court.

Tourism industry seeks wellness injection for business boost

India is recognised globally for its wealth of wisdom in alternative therapies like ayurveda and yoga. But tourism operators complain that not enough is being done to promote such wellness facilities

In the late 60s, when The Beatles came to India, they visited Maharishi Mahesh Yogi's ashram in Rishikesh, the pilgrim town in the foothills of the Himalayas. This spiritual quest by the fab four inspired many of their songs in the popular albums like 'Abbey Road' and 'White Album'.

Such a trip by a foreigner today would be labelled a 'wellness tour'. An increasing number of foreigners are visiting the country these days in search of alternative therapies, while enjoying a holiday at peaceful locales, opening up vast revenue-earning potential for the tourism industry.

Yes, India is recognised globally for its wealth of wisdom in areas of ayurveda and yoga, the principal alternative therapies sought today. And these are being promoted along with naturopathy and spiritual philosophy which is so integral to the Indian way of life. However, according to industry representatives not enough is being done to promote and market wellness tourism to exploit the potential in the country.

Zelam Chaubal, director, Kesari Tours, says, "Wellness tourism is and has been developed in India since a long time, but it has not been marketed and taken advantage off. When it comes to marketing and promoting our heritage or whatever good we have with us we are weak in it. The most important factor is infrastructure, and we lack in it."

Increasing work pressure and a stressful lifestyle are leading more and more travellers, who are going on a holiday, to seek facilities like spas, yoga, ayurveda and fitness centres. "India is becoming a medical and wellness hub as medical treatment here is available at much lower costs than in the Western world. People have started travelling to India for medical and wellness treatment. So there are properties that have been developed in that way too." Mrs Chaubal said. "Usually Indians enjoy this for a week or so, but inbound tourists come here and spend an average 15 days to month(s)."

Manoj Gurshahani, director of travel,, explained with an example: "A foreigner will come to, say for instance in Jaipur, for dental surgery, which hardly takes a day's time. The rest of the time he/she is relaxing and shopping. Such numbers of travellers are increasing and it needs to be promoted well."

Among various destinations in India, there are a few places that are preferred for the facilities they have developed. Like Kerala with its spas and backwaters, and Rishikesh, a hub of spirituality. "Kerala is a very good example in India where wellness tourism is developed, and Indians as well as foreigners are availing of the facilities here on a large scale. Atmasantulan village at Karla, near Lonavala in Maharashtra, is another example. Ananda spa at Rishikesh is world renowned facility that promotes wellness tourism," says Mrs Chaubal.

Recently, inaugurating the national workshop on promotion of wellness tourism, Union minister for tourism Subodh Kant Sahay, announced guidelines for wellness centres.  "These guidelines have been developed by the National Accreditation Board for Hospital & Healthcare Providers (NABH) and approved by the Department of AYUSH, Ministry of Health & Family Welfare. The wellness centres accredited as per these guidelines will give a level of confidence to the tourist and those availing of the wellness services…" an official statement said.

Minister of state for tourism Sultan Ahmed was quoted in the statement as saying, "It is essential for destinations to create unique travel experiences on an emotional, physical, intellectual and even spiritual level. Wellness has been the USP of Indian tourism. And that wellness tourism is now creating major opportunities for destinations, resorts, spas, hotels and other smaller businesses throughout the tourism industry."

Campaigns like "Incredible! India" are promoting the tourism industry as a whole, but more such campaigns are needed to specifically promote wellness tourism. "Wellness tourism can be a major source of revenue for the tourism industry if promoted properly. Marketing is a weak point, more promotional activities like 'Incredible! India', which is one of the successful promotional campaigns, are required," Mr Gurshahani said.




7 years ago

Government should take more step to promote Tourism industry...


shadi katyal

In Reply to namita 7 years ago

Government cannot do everything.we do have a depart6ment of tourist but what have they done so far. Stop dreaming and depending on Govt as it is our duty to see that roads are clean and there are no mice and rats running in the trains.Govt cant teach us civility and politeness. It is our duty to selcome tourist as our guests and not think of our pockets.
GOI took a chapter from USSR and opened hotels and took over Airlines but look at the loses of each and everyone.
Ashoka in Delhi is used to entertain without any payment to Mp and their guests. that is take over by GOI. Travel with AirIndia vs Jet etc.
Why do you think 80% of foreign traveller go by foreign careers???

Shadi Katyal

7 years ago

Why are we living in a delusion that our Tourist trade due to Yoga etc should be flourishing . It is easy to talk of Beatles but what did they bring, mostly beatniks.
Even Thailand does better than India and reasons are many such as cleanliness of the cities and less polution as well as politeness.
We wish to hearts of visitors and not of their pockets only. We are very arrogant and behave as the visitor has no other choice.
If one looks at the figures of Indian Tourist Industry one will find downward and beside only back packers are the arrival with less to spend.
India must improve her infrastructure and train people to be polite to visitors. Can we leqarn from Thailand anything?
Govt has failed to help the industry as the industry itself has no desire to improve

ulation as well noise.

are very polite and not arrogant like most of our police and babus

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